I am sure we all must have received calls from our banking relationship managers trying to convince us to buy so and so financial product..may be its a mutual fund scheme or insurance investment product. When we go to our banks, they will try and push us to buy one of their financial product, whether we require it or not.
Do they really care what is best suited for us without understanding our investment objectives and risk profile? No. They have to just meet their targets by selling(or mis-selling) a financial product as part of their non banking revenue generation.When I say mis-selling, I mean
1. Concealing material, important and relevant information about the product
2. Whether the product is suitable to the customer or not
3. Not explaining the risk associated with that product and
4. Making misleading and false statement
This kind of mis-selling by our banks is difficult to quantify because most of these things happen through verbal communication and we end up buying their financial products which are neither suitable for us nor help us meeting our financial goals.
Many Asset Management Companies (AMC) which are running different mutual fund schemes are from the same fund houses which own these banks. Most of the banks will try and sell their own financial products, irrespective of the fact whether it’s beneficial to us or not. Please take a look at the table below which shows that these banks get maximum commission by selling their own mutual fund schemes.(courtsey: OutlookAsia)